Interim Results

RNS Number : 8936L
Advanced Medical Solutions Grp PLC
11 September 2019

11 September 2019

 

 

Advanced Medical Solutions Group plc

(“AMS” or the “Group”)

 

Interim Results for the six months ended 30 June 2019

 

Winsford, UK, 11 September 2019: Advanced Medical Solutions Group plc (AIM: AMS), the surgical and advanced woundcare specialist company, today announces its unaudited interim results for the six months ended 30 June 2019.

 

 

Financial Highlights:

 

 

£ million

 

H1 2019

H1 2018

Reported change

Growth at  constant currency¹

Group revenue

48.7

47.6

2%

1%

Adjusted

Adjusted2 profit before tax

12.8

13.6

-6%

Adjusted2 diluted earnings per share (pence)

4.80

4.97

-3%

Adjusted3 net cash inflow from operating activities

11.2

12.7

-12%

Reported

Profit before tax

11.2

13.6

-17%

Diluted earnings per share (pence)

4.06

4.95

-18%

Net cash inflow from operating activities

10.3

12.7

-19%

Net cash4

63.9

71.1

-10%

Interim dividend per share (pence)

0.50

  0.42

19%

 

 

Business Highlights (including post period end):

 

· Group revenues up 2% to £48.7 million (1% at constant currency):

Product ranges and geographies excluding US LiquiBand® delivered 10% revenue growth at reported and constant currency

27% reduction in US LiquiBand® sales, as previously referenced in our trading update, due to destocking, competitor activity and delayed product launches

· Acquisition of Sealantis in January for US$25 million:

Integration and commercialisation plans progressing well

In line with expectations, planned investment in R&D impacted Group profit and positions the Group for future growth

· Realigned business unit structure in place since January 2019:

o Surgical: revenues down 3% to £26.5 million (2018 H1: £27.3 million) and by 4% at constant currency

§ LiquiBand® delivered strong growth in all territories, with the exception of the US:

· US revenues down by 27% to £7.7 million (2018 H1: £10.5 million), and by 31% at constant currency

· UK and Germany revenues up 25% at reported and constant currency to £3.4 million (2018 H1: £2.7 million)

· Rest of World revenues up 46% to £2.1 million (2018 H1: £1.4 million) and by 45% at constant currency

§ LiquiBand® Fix8™ revenues up 20% at reported and constant currency to £1.2 million (2018 H1: £1.0 million)

§ RESORBA® sutures up 6% to £7.2 million (2018 H1: £6.8 million) and by 7% at constant currency

§ RESORBA® biosurgicals up 5% to £4.5 million (2018 H1: £4.3 million) and by 6% at constant currency

Woundcare: revenues up 9% to £22.2 million (2018 H1: £20.3 million) and by 8% at constant currency

§ Infection Management up 14% to £9.4 million (2018 H1: £8.3 million) and by 12% at constant currency

· Eddie Johnson appointed as CFO and Board member on 1 January 2019, following the planned retirement of Mary Tavener

· The Board intends to pay an interim dividend of 0.50p per share (2018 H1: 0.42p), an increase of 19%, on 25 October 2019 to shareholders on the register at the close of business on 27 September 2019.

 

Commenting on the interim results, Chris Meredith, CEO of AMS, said: “The Group continues to perform well and I am pleased to report another period of growth. Despite disappointing trading in the US for LiquiBand, which we expect to recover next year, we are excited by the upcoming product approvals and pleased with the progress made across multiple products and markets. The Board continues to be optimistic about our long-term prospects and the potential for further organic and acquisitive growth.”

 

– End –

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes

1     Constant currency adjusts for the effect of currency movements by re-translating the current period’s performance at the         previous period’s exchange rates

2     All items are shown before exceptional items which, in 2019 H1 were £0.9 million (2018 H1: nil) and before amortisation of acquired intangible assets which, in 2019 H1, were £0.7 million (2018 H1: £0.04 million) as defined in the financial review

3    Adjusted net cash inflow from operating activities is calculated as net cash inflow from operating activities plus exceptional items of £0.9 million (2018 H1: £nil)

4     Net cash is defined as cash and cash equivalents plus short term investments less financial liabilities and bank loans

 

 

 

 

For further information, please contact:

 

Advanced Medical Solutions Group plc

Tel: 44 (0) 1606 545508

Chris Meredith, Chief Executive Officer

Eddie Johnson, Chief Financial Officer

Consilium Strategic Communications

Tel: 44 (0) 20 3709 5700

Mary-Jane Elliott / Matthew Neal / Nicholas Brown / Olivia Manser

 

Investec Bank plc (NOMAD) & Broker

Tel: 44 (0) 20 7597 5970

Daniel Adams / Gary Clarence / Patrick Robb

 

 

About Advanced Medical Solutions Group plc

 

AMS is a world-leading independent developer and manufacturer of innovative and technologically advanced products for the global surgical and woundcare markets, focused on quality outcomes for patients and value for payers. AMS has a wide range of surgical products including tissue adhesives, sutures, haemostats, and internal fixation devices, which it markets under its brands LiquiBand®, RESORBA®, and LiquiBandFix8®. AMS also supplies wound care dressings such as silver alginates, alginates and foams through its ActivHeal® brand as well as under white label. In 2019, the Group acquired Sealantis, an Israeli-based medical device company with a patent-protected internal sealant technology platform.

 

AMS’s products, manufactured in the UK, the Netherlands, Germany, and the Czech Republic, are sold globally via a network of multinational or regional partners and distributors, as well as via AMS’s own direct sales forces in the UK, Germany, the Czech Republic and Russia. The Group has R&D innovation hubs in the UK and Germany, as well as the recently acquired R&D facility in Israel. Established in 1991, the Group has approximately 650 employees. For more information please see www.admedsol.com.

Chief Executive’s Review

 

Group performance

 

I am pleased to report another period of growth for the group despite the downturn in US LiquiBand® sales. Revenue increased by 2% to £48.7 million and by 1% at constant currency with continued good results from the majority of our geographies and product ranges. Excluding US LiquiBand®, Group sales increased by 10% on both a reported and constant currency basis.

 

As previously announced, Surgical revenues were impacted by a shortfall in US LiquiBand® sales and  decreased by 3% (4% at constant currency) to £26.5 million (2018 H1: £27.3 million). In contrast, Woundcare revenues increased by 9% (8% at constant currency) to £22.2 million (2018 H1: £20.3 million) as a result of increased partner demand for antimicrobial dressings in Infection Management.

 

Realigned Business Units for 2019

 

At the start of 2019, we made some adjustments to our Business Unit structure to better manage our different surgical and advanced woundcare opportunities and to optimise the Group’s routes to market. We are pleased this is having the desired effect on woundcare and we believe that with our two individual business units we are now optimally positioned to drive growth for the future.

 

Growth

 

Despite the challenging conditions experienced across our sector, I am pleased that the Group continues to see significant growth opportunities in our surgical and woundcare ranges. Whilst a slow-down in our progress with US LiquiBand® affected our overall Surgical growth during the period, the performance of our range in all other key markets and regions continues to be very strong.

 

In January 2019, AMS announced the acquisition of Sealantis for US$25 million. Sealantis’ products, which reduce leakage of blood or fluid in high-risk surgery, provide AMS with access to the growing $1 billion internal sealants market. Integration is progressing well and is largely complete. We expect to start clinical trials on target at around the end of 2019 to support first product launches for gastrointestinal surgery in 2021 with further innovations to follow in subsequent years.

 

The Group continues to explore options to acquire other businesses to accelerate growth and deliver value for our shareholders.  Our selection criteria remain unchanged.  The Group has disclosed an exceptional item in the period which reflects costs incurred in such business development activities. 

 

Regulatory

 

In the first half of 2019, AMS successfully completed its five-year recertification process for the LiquiBand® range following on from the recent recertification of the RESORBA® portfolio. This demonstrates our capability to navigate the increasingly challenging regulatory framework as we implement our robust group wide regulatory plan. Consequently, AMS is well prepared for the stricter requirements on product safety and performance, clinical evaluation and post-market clinical evidence stipulated by the new European Medical Devices Regulation (MDR) which is currently in its transition phase.

 

In terms of growth and innovation, we are beginning to see the impact of the MDR on the sector and our extensive preparation is starting to provide opportunities and we remain confident in AMS’s ability to exploit them.

 

Brexit

 

Having completed a comprehensive review of Brexit related risks, we continue to be well prepared for the possibility of a ‘No Deal’ Brexit. We have reassigned our UK product certificates to BSI Netherlands and appointed Advanced Medical Solutions BV as EU Authorised Representative for our UK manufactured products. We have increased stock holdings on all sites and continue to have extensive planning conversations with our customers.

 

 

 

 

Business Unit performance

 

Surgical Business Unit

 

The Surgical Business Unit reports tissue adhesives, sutures, biosurgical devices and internal fixation devices marketed under the AMS brands LiquiBand®, RESORBA® and LiquiBand® Fix8™. In the first half of 2019, Surgical revenue decreased by 3% to £26.5 million (2018 H1: £27.3 million) (4% at constant currency), with a slowdown in the US masking significant progress made elsewhere.

 

Surgical Business Unit

2019 H1

2018 H1

Reported Growth

Growth at constant currency

Advanced closure

13,093

14,575

(10%)

 (13%)

Internal Fixation and Sealants

1,179

981

20%

20%

Traditional Closure

7,181

6,761

6%

7%

Biosurgical Devices

4,508

4,295

5%

6%

Topical Sealants

530

693

(24%)

(21%)

TOTAL

26,491

27,305

(3%)

(4%)

 

 

Advanced Closure 

Advanced Closure comprises predominately the LiquiBand® topical skin adhesive range of products incorporating medical cyanoacrylate adhesives in combination with purpose-built applicators. These products are used to close and protect a broad variety of surgical and traumatic wounds.

 

Advanced Closure

2019 H1

2018 H1

Reported Growth

Growth at constant currency

Americas

7,690

10,493

(27%)

(31%)

UK/Germany

3,353

2,676

25%

25%

Rest of World

2,050

1,406

46%

45%

TOTAL

13,093

14,575

(10%)

(13%)

 

Revenues grew strongly in all territories with the exception of the US where we were impacted by a combination of factors:

· Destocking

· Competitor gains at two large Group Purchasing Organisations

· Lack of combined glue and tape device for large wound closure in the AMS portfolio

 

Consequently, first half revenues decreased by 10% to £13.1 million (2018 H1: £14.6 million) or by 13% at constant currency.

 

US LiquiBand® is expected to return to growth in 2020 due to an expanded product portfolio and the stabilisation of customer inventories. We expect to obtain US approval before the end of the year for the newly developed accelerated drying device and to launch with a major partner. In addition, the LiquiBand® XL device for closing larger wounds will significantly augment our portfolio and open new markets and customer opportunities. The LiquiBand® XL regulatory process is progressing slower than anticipated with US approval now expected in Q3 2020.

 

Internal Fixation and Sealants

This category comprises our LiquiBand® Fix 8™ devices, indicated for the internal fixation of hernia meshes using our LiquiBand® technology. Through the accurate delivery of individual drops of cyanoacrylate adhesive, LiquiBand® Fix8™ is used to hold hernia meshes in place within the body instead of traditional tacks and staples.

 

Revenue in this category increased by 20% to £1.2 million (2018 H1: £1.0 million) driven by demand for the LiquiBand® Fix 8™ laparoscopic device in particular. Open hernia surgery is also a substantial portion of the global hernia market and represents a significant opportunity for AMS.  The open surgery device soft launched in late 2018 in order to gather clinical feedback and, to date, this has been very positive from surgical users with no recommended design changes and we are therefore moving forward with full promotion and sales activities in the second half of the year.

 

The US Premarket Approval process for LiquiBand® Fix8™ is underway with IDE patient enrolment commencing in August 2019. We continue to be excited about the long-term prospects for the LiquiBand® Fix8™ portfolio and entry into the US will be a significant milestone for the Group.

 

The global internal surgery market represents a significant opportunity for AMS and the acquisition of Sealantis, announced in January 2019, provides AMS with a technology platform and delivery systems to access the $1 billion internal sealant market. Premarket activities in R&D, marketing and regulatory are ongoing and following this initial work, we are implementing product design enhancements ahead of the trials starting at around the end of 2019.

 

Traditional Closure

The traditional closure category includes our RESORBA® branded Absorbable and Non-absorbable Suture ranges which include certain surgical specialties such as dental and ophthalmic and are sold in Germany and numerous other territories. Revenue increased by 6% to £7.2 million (2018 H1: £6.8 million) (7% at constant currency).

 

AMS will continue to explore targeted opportunities in this area and will aim to drive growth and market share by bundling sutures with other products. AMS is also investing in operational improvements and capacity to allow for improved flexibility and efficiencies.

 

Biosurgical Devices

The Biosurgical devices category principally comprises collagen-based materials including our RESORBA® Gentacoll® Gentamycin collagen products used in Orthopaedic and Cardiac applications, and collagen membranes and cones used in Dental applications. Revenue increased by 5% to £4.5 million (2018 H1: £4.3 million) and by 6% at constant currency due to progress with multiple distributors.

 

Prescription usage of our antibiotic collagen pouch for cardiovascular devices in Germany began at the end of 2018 and we are also working towards approval for this product in the US. Antibiotic loaded collagens provide local, rather than systemic, drug delivery giving significant patient benefits. This is a key product development focus for AMS and we are working on development and regulatory activities for alternative antibiotics for Orthopaedic and Cardiac applications.

 

Submission for CE approval for a Vancomycin-containing collagen was completed in the first half of 2019 with expected notified body and pharmaceutical body responses anticipated in the first half of 2020.

 

 

 

Woundcare Business Unit

The Woundcare Business Unit is comprised of our multi-product portfolio of advanced woundcare dressings and bulk materials sold under partner brands plus the AMS branded ActivHeal® range sold predominately to the NHS.

In the first half of 2019, revenue increased by 9% to £22.2 million (2018 H1: £20.3 million) (8% at constant currency) largely driven by increased partner demand for antimicrobial dressings (Infection Management).

Woundcare Business Unit

2019 H1

2018 H1

Reported Growth

Growth at constant currency

Infection Management

9,407

8,273

14%

12%

Exudate Management

10,082

9,466

7%

5%

Other Woundcare

2,734

2,577

6%

6%

TOTAL

22,223

20,316

9%

8%

 

 

Infection Management

The infection management category comprises advanced woundcare dressings that incorporate antimicrobials such as Silver and Polyhexamethylene Biguanide (PHMB). Revenue increased by 14% to £9.4 million (2018 H1: £8.3 million) and by 12% at constant currency, with growth being driven by demand from a number of new EU and ROW partners along with additional orders from some existing customers which did include an element of Brexit planning.

 

The new atraumatic Silicone PHMB variant which received US approval, post-period end, in July 2019 gives AMS and its commercial partners much greater access to the attractive US silicone antimicrobial foam market, which is worth in excess of $100m and growing at 6% year-on-year. We expect to start shipping orders for Silicone PHMB dressings around the end of 2019. The first US partner for our existing PHMB range, which was approved in late 2018, is working through its launch inventories and is expected to reorder in the second half of 2019.

 

Post-period end, in July 2019, we also obtained US approval for our Silver High Performance Dressing; the Group’s next generation antimicrobial gelling fibre technology with excellent performance and patent protected construction and expect to receive launch orders in the second half of 2019.

 

In August 2019, we gained US and EU approval for our Moisture Wicking Fabric with silver, indicated for use in the management of skin folds and skin-on-skin friction. This gives AMS and its partners access to a $25 million US market as well as the nascent EU market with orders expected in the second half of 2019.

 

We expect a second major US partner launch for our silver post-operative dressings in the first half of 2020 whilst the initial partner is expected to reorder in the second half of 2019.

 

Looking forward, the Group is working on developing next generation high-gelling products with differentiated antibiofilm claims.

 

Exudate Management

Exudate management comprises advanced woundcare dressings and gels which do not incorporate any antimicrobial elements. Following our business unit alignment in January 2019, this category includes the majority of our ActivHeal® range. Revenue increased by 7% to £10.1 million (2018 H1: £9.5 million) (5% at constant currency).

 

AMS launched the new Lite foam range for wounds with low to medium exudate at the end of 2018. It now incorporates a range of shapes and sizes for the acute post-surgery market and it is being distributed by a number of our partners in the US, EU and ROW.

 

At around the end of 2019, we expect to be able to extend the claims on our silicone foam range to include pressure ulcer prevention and to add further customers in new territories.

 

We are confident that the above actions, coupled with our ability to meet the demands of MDR, will continue to counteract the ongoing challenging market conditions in the advanced woundcare market.

 

Other Woundcare

Other woundcare comprises royalties, fees and woundcare sealants. Revenue increased by 6% at reported and constant currency to £2.7 million (2018 H1: £2.6 million).

 

 

 

Summary and outlook

 

AMS has delivered another period of growth, notwithstanding the previously reported unexpected slow down with US LiquiBand®. With continued strong performance elsewhere in the Group and our new product launches in the second half, trading is in line with the Board’s expectations for the full year. US LiquiBand® is expected to return to growth in 2020, especially given the planned launches of our new accelerated drying device which will widen our product range and Liquiband® XL device which will open new markets and customer opportunities.

 

The Group continues to execute on its strategy of delivering consistent growth through exploiting multiple routes to market, ensuring our products add value to patients and payors, and diversifying through our product mix and innovation.

 

 

 

Financial Review

 

IFRS reporting

 

To provide the clearest possible insight into our performance, the Group uses alternative performance measures. These measures are not defined in International Financial Reporting Standards (IFRS) and, therefore, are considered to be non-GAAP (Generally Accepted Accounting Principles) measures. Accordingly, the relevant IFRS measures are also presented where appropriate. We use such measures consistently at the half year and full year and reconcile them as appropriate. The measures used in this statement include constant currency revenue growth, adjusted operating margin, adjusted profit before tax and adjusted net cash inflow from operating activities, allowing the impacts of exchange rate volatility, exceptional items and amortisation to be separately identified. Net cash is an additional non-GAAP measure used.

 

Overview

 

Revenue increased by 2% to £48.7 million (2018 H1: £47.6 million). At constant currency, revenue growth would have been 1%.

 

Exceptional items of £0.9 million in the six month period (2018 H1: £nil) relate to the integration costs of the Sealantis acquisition as well as other business development activities.

 

Amortisation of acquired intangible assets was £0.7 million in the six-month period (2018 H1: £0.04 million). On the acquisition of Sealantis, we recognised a technology-based intangible asset of £15.0 million, which will be amortised over the next nine years ending 31 December 2027.

 

Adjusted operating profit which excludes amortisation of acquired intangibles and exceptional costs, decreased by 5.2% to £13.0 million (2018 H1: £13.7 million) whilst the adjusted operating margin decreased by 210 bps to 26.7% (2018 H1: 28.8%) due to the change in sales mix and the impact of the first period of investment in Sealantis operating costs which were £0.5 million in the first half (2018 H1: £nil).

 

Excluding exceptional items, administration expenses increased by 5% to £16.6 million (2018: £15.8 million) inclusive of losses arising from foreign exchange movements. The Group incurred £2.9 million of gross R&D, regulatory and clinical spend in the period (2018 H1: £2.4 million), representing 5.9% of sales (2018 H1: 5.0%) reflecting ongoing investment in innovation and in accommodating the heightened regulatory environment.

 

The Group generated adjusted profit before tax of £12.8 million (2018 H1: £13.6 million) and profit before tax of £11.2 million (2018 H1: £13.6 million).

 

The Group adopted IFRS 16 (Leases) in 2019 and the comparative periods have been restated, which reduced profit before tax by £0.1 million in the period (2018 H1: £0.1 million). There is no overall impact on the Group’s cash and cash equivalents as a result of IFRS 16.

 

 

 

Unaudited

Unaudited

Six months ended

Six months ended

30-Jun-19

30-Jun-18

Profit before tax

11,219

13,552

Amortisation of acquired intangibles

682

40

 

 

The Group’s effective tax rate, reflecting the blended tax rates in the countries where we operate and  including UK patent box relief, increased to 21.8% (2018 H1: 21.1%) mainly due to some of the exceptional items in the period not being deductible for tax purposes and to Sealantis operating losses not being offset against profits elsewhere in the group.

 

Adjusted diluted earnings per share decreased by 3.5% to 4.80p (2018 H1: 4.97p) and diluted earnings per share decreased by 18.1% to 4.06p (2018 H1: 4.95p).

 

The Board intends to pay an interim dividend of 0.50p per share on 25 October 2019 to shareholders on the register at the close of business on 27 September 2019. This is an increase of 19% compared to the first half of 2018 and reflects the Board’s confidence in the future growth of the Group.

 

 

Operating result by business segment

Six months ended 30 June 2019

(Unaudited)

Surgical

(Unaudited)

Woundcare

Revenue

26,491

22,223

Profit from operations

8,251

4,309

Amortisation of acquired intangibles

678

4

Adjusted profit from operations5

8,929

4,313

Six months ended 30 June 2018

Revenue

27,305

20,316

Profit from operations

9,914

4,029

Amortisation of acquired intangibles

38

2

Adjusted profit from operations5

9,952

4,031

 

 

5 Adjusted for exceptional items and for amortisation of acquired intangible assets

 

Table is reconciled to statutory information in note 7 of the financial information.

 

Surgical

Surgical revenues decreased by 3% to £26.5 million (2018 H1: £27.3million) and by 4% at constant currency due to a reduction in sales of LiquiBand® into the US. Adjusted operating margin decreased 270 bps to 33.7% (2018 H1: 36.4%) mainly due to the change in sales mix, exchange rate movements and increased investment in R&D, clinical and regulatory affairs.

 

Woundcare

Woundcare revenues increased by 9% to £22.2 million (2018 H1: £20.3 million) at reported currency and by 8% at constant currency. Adjusted operating margin decreased by 40 bps to 19.4% (2018 H1: 19.8%).

 

Currency

More than one third of Group revenues are invoiced in US Dollars and approximately one quarter are invoiced in Euros. The Group hedges significant currency transaction exposure by using forward contracts, and aims to hedge approximately 80% of its estimated transactional exposure for the next 12 to 18 months. The Group estimates that a 10% movement in the £:US$ or £:€ exchange rate will impact Sterling revenues by approximately 3.3% and 2.8% respectively and in the absence of any hedging this would have an impact on profit of 2.7% and 1.1%. 

 

Cash Flow

Adjusted net cash inflow from operating activities reduced by 12% to £11.2 million (2018 H1: £12.7 million) predominately due to increased payments of corporation tax. Net cash inflow from operating activities was further impacted by exceptional items and therefore reduced by 19% to £10.3 million (2018 H1: £12.7 million).

 

Reconciliation of Net cash inflow from operating activities to Adjusted net cash inflow from operating activities

Unaudited

Unaudited

Six months ended

Six months ended

Change

 

 

At the end of the period, the Group had net cash of £63.9 million (31 December 2018: £76.4 million) with outflows in the first half of 2019 relating to Sealantis including the acquisition (£18.4 million), integration costs (£1.2 million) and operating costs (£0.5 million).

 

In the first half of 2019, receivables reduced by £2.2 million (2018 H1: £1.7 million) with debtor days at 41 (2018 H1: 43 days) and payables reduced by £2.8 million (2018 H1: £1.8 million) with creditor days at 26 (2018 H1: 29 days). Inventory increased by £1.4 million in the period (2018 H1: £2.2 million) or 5.0 months of supply (2018 H1: 4.6 months of supply) as we continue to hold higher stocks to mitigate possible Brexit supply risks and further increased RESORBA® inventory in preparation for anticipated incremental demand in the second half of 2019.

 

In the period, we invested £2.6 million in capital equipment, R&D and regulatory costs including investment in converting and packaging machines (2018 H1: £2.3 million).

 

Tax payments increased to £2.9 million (2018 H1: £1.7 million) which is £0.5 million higher than tax in the income statement due to the timing of tax payments on account.

 

In June 2019, the Group paid its final dividend for the year ended 31 December 2018 of £1.9 million (2018 H1: £1.6 million).

 

In December 2018, the Group secured a new £80 million, multi-currency credit facility provided jointly by HSBC and The Royal Bank of Scotland, which is in place until December 2023. It is unsecured and undrawn. This facility carries an annual interest rate of LIBOR or EURIBOR plus a margin that varies between 0.60% and 1.70% depending on the Group’s net debt to EBITDA ratio.

 

 

Financial Outlook

Despite the good overall performance, the downturn in US LiquiBand®, investment in Sealantis and adverse foreign exchange contracts have affected profitability and cash flow in the period. However, trading for the full year is in line with the Board’s expectations and as these items unwind, the outlook for the future remains strong.

(Unaudited)

(Unaudited) Restated6

(Unaudited) Restated6

Six months ended 30 June 2019

Six months ended 30 June 2018

Year ended 31 December 2018

Before

Exceptional

Before

Exceptional

Before

Exceptional

Exceptional

Items

Exceptional

Items

Exceptional

Items

Items

Note 9

Total

Items

Note 9

Total

Items

Note 9

Total

Revenue from continuing operations

7

48,714

48,714

47,621

47,621

102,598

102,598

Gross profit

29,214

29,214

29,995

29,995

63,406

63,406

Distribution costs

(459)

(459)

(614)

(614)

(1,316)

(1,316)

Administration costs

(16,607)

(920)

(17,527)

(15,778)

(15,778)

(33,318)

(402)

(33,720)

Profit from operations

12,305

(920)

11,385

13,662

13,662

28,876

(402)

28,474

Finance income

200

200

157

157

378

378

Profit before taxation

12,139

(920)

11,219

13,552

13,552

28,673

(402)

28,271

Profit for the period attributable to equity holders of the parent

9,693

(920)

8,773

10,686

10,686

22,889

(402)

22,487

Earnings per share

Basic

6

4.53p

(0.43p)

4.10p

5.02p

5.02p

10.74p

(0.19p)

10.55p

Diluted

6

4.48p

(0.42p)

4.06p

4.95p

4.95p

10.59p

(0.18p)

10.41p

(Unaudited)

(Unaudited) Restated

(Unaudited) Restated

Six months ended 30 June 2019

Six months ended 30 June 2018

Year ended 31 December 2018

Exchange differences on translation of foreign operations

930

(4)

466

Gain/(loss) arising on cash flow hedges

284

(1,613)

(3,064)

Other comprehensive income/(expense) for the period

1,214

(1,617)

(2,598)

Total comprehensive income for the period attributable to equity holders of the parent

9,987

9,069

19,889

 

 

6 See note 4 in the notes to the consolidated financial statements

7 Adjusted for exceptional items and for amortisation of acquired intangible assets

 

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

 

(Unaudited)

(Unaudited)

(Unaudited)

30 June 2019

30 June 2018

Restated8

31 December 2018

Restated8

Note

£’000

£’000

£’000

Assets

Non-current assets

Acquired intellectual property rights

9,654

9,622

9,673

Intangible assets

14,875

Software intangibles

2,983

2,876

2,548

Development costs

3,696

2,506

3,204

Goodwill

52,333

41,746

42,145

Property, plant and equipment

27,563

27,694

27,850

Loans and other financial assets

30

Deferred tax assets

179

244

208

Trade and other receivables

321

19

415

111,634

84,707

86,043

Current assets

Inventories

16,298

13,232

14,800

Trade and other receivables

23,288

18,830

27,172

Current tax assets

22

813

Cash and cash equivalents

63,888

71,129

76,391

103,496

103,191

119,176

Total assets

215,130

187,898

205,219

Liabilities

Current liabilities

Trade and other payables

11,086

8,856

14,642

Current tax liabilities

2,267

3,310

3,863

Lease liabilities

983

931

976

14,336

13,097

19,481

Non-current liabilities

Trade and other payables

3,540

1,262

655

Deferred tax liabilities

5,934

3,126

3,303

Lease liabilities

8,567

9,317

9,055

18,041

13,705

13,013

Total liabilities

32,377

26,802

32,494

Net assets

182,753

161,096

172,725

Equity

Share capital

13

10,738

10,672

10,674

Share premium

36,072

35,148

35,192

Share-based payments reserve

8,343

5,562

7,333

Investment in own shares

(159)

(156)

(156)

Share-based payments deferred tax reserve

729

815

708

Other reserve

1,531

1,531

1,531

Hedging reserve

(2,122)

(955)

(2,406)

Translation reserve

4,219

2,819

3,289

Retained earnings

123,402

105,660

116,560

Equity attributable to equity holders of the parent

182,753

161,096

172,725

 

 

8 See note 4 in the notes to the consolidated financial statements

CONDENSED CONSOLIDATED Statement of Changes in Equity

Attributable to equity holders of the Group

 

Share-

Investment

Share-based

Share

Share

based

in own

payments

Other

Hedging

Translation

Retained

capital

premium

payments

shares

deferred tax

reserve

reserve

reserve

earnings

Total

£’000

£’000

£’000

£’000

£’000

£’000

£’000

£’000

£’000

£’000

At 1 January 2019 (Unaudited)

10,674

35,192

7,333

(156)

708

1,531

(2,406)

3,289

116,560

172,725

Consolidated profit for the period to 30 June 2019

8,773

8,773

Other comprehensive income

284

930

1,214

Total comprehensive income

284

930

8,773

9,987

Share-based payments

1,065

1,065

Share options exercised

64

880

(55)

21

910

Shares purchased by EBT

(603)

(603)

Shares sold by EBT

600

600

Dividends paid

(1,931)

(1,931)

At 30 June 2019 (unaudited)

10,738

36,072

8,343

(159)

729

1,531

(2,122)

4,219

123,402

182,753

Share-

Investment

Share-based

Share

Share

based

in own

payments

Other

Hedging

Translation

Retained

capital

premium

payments

shares

deferred tax

reserve

reserve

reserve

earnings

Total

£’000

£’000

£’000

£’000

£’000

£’000

£’000

£’000

£’000

£’000

Balance at 1 January 2018 – Restated9

10,632

34,778

4,676

(152)

815

1,531

658

2,823

96,565

152,326

Consolidated profit for the period to 30 June 2018

10,686

10,686

Other comprehensive income

(1,613)

(4)

(1,617)

Total comprehensive income

(1,613)

(4)

10,686

9,069

Share-based payments

907

907

Share options exercised

40

370

(21)

389

Shares purchased by EBT

(600)

(600)

Shares sold by EBT

596

596

Dividends paid

(1,591)

(1,591)

At 30 June 2018 (Unaudited)

10,672

35,148

5,562

(156)

815

1,531

(955)

2,819

105,660

161,096

 

 

 

Share-

Investment

Share-based

Share

Share

based

in own

payments

Other

Hedging

Translation

Retained

capital

premium

payments

shares

deferred tax

reserve

reserve

reserve

earnings

Total

£’000

£’000

£’000

£’000

£’000

£’000

£’000

£’000

£’000

£’000

Balance at 1 January 2018 – Restated1

10,632

34,778

4,676

(152)

815

1,531

658

2,823

96,565

152,326

Consolidated profit for the year to 31 December 2018

22,487

22,487

Other comprehensive income

(3,064)

466

(2,598)

Total comprehensive income

(3,064)

466

22,487

19,889

Share-based payments

1,659

(107)

1,552

Share options exercised

42

414

998

1,454

Shares purchased by EBT

(600)

(600)

Shares sold by EBT

596

596

Dividends paid

(2,492)

(2,492)

At 31 December 2018 (unaudited)

10,674

35,192

7,333

(156)

708

1,531

(2,406)

3,289

116,560

172,725

 

 

 9 See note 4 in the notes to the consolidated financial statements

 

 

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

 

(Unaudited)

(Unaudited)

(Unaudited)

Restated10

Restated10

Six months

Six months

Year

ended

ended

ended

30-Jun-19

30-Jun-18

31-Dec-18

Cash flows from operating activities

Profit from operations

11,385

13,662

28,474

Adjustments for:

Depreciation

1,603

1,590

3,180

Amortisation – intellectual property rights

682

40

81

 – development costs

244

128

325

 – software intangibles

218

244

593

Increase in inventories

(1,361)

(2,174)

(3,707)

Decrease/(increase) in trade and other receivables

2,162

1,714

(6,813)

(Decrease)/increase in trade and other payables

(2,798)

(1,752)

1,692

Share-based payments expense

1,065

907

1,659

Cash flows from investing activities

Purchase of software

(662)

(58)

(304)

Capitalised research and development

(730)

(498)

(1,392)

Purchases of property, plant and equipment

(1,231)

(1,752)

(3,062)

Disposal of property, plant and equipment

6

78

Interest received

199

157

377

Cash flows from financing activities

Dividends paid

(1,931)

(1,591)

(2,492)

Repayments of principal under lease liabilities

(486)

(428)

(858)

Issue of equity shares

907

385

430

Shares purchased by EBT

(603)

(600)

(600)

Shares sold by EBT

600

596

596

Net (decrease)/increase in cash and cash equivalents

(12,450)

8,659

13,866

Cash and cash equivalents at the beginning of the period

76,391

62,454

62,454

 

10 See note 4 in the notes to the consolidated financial statements

 

Notes Forming Part of the Consolidated Financial Statements

 

1.      Reporting entity

 

Advanced Medical Solutions Group plc (“the Company”) is a public limited company incorporated and domiciled in England and Wales (registration number 2867684). The Company’s registered address is Premier Park, 33 Road One, Winsford Industrial Estate, Cheshire, CW7 3RT.

 

The Company’s ordinary shares are traded on the AIM market of the London Stock Exchange plc. The consolidated financial statements of the Company for the six months ended 30 June 2019 comprise the Company and its subsidiaries (together referred to as the “Group”).

 

The Group is primarily involved in the design, development and manufacture of surgical and advanced woundcare products for sale into the global medical device market.

 

2.      Basis of preparation

 

The information for the period ended 30 June 2019 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for the year ended 31 December 2018 has been delivered to the Registrar of Companies. The auditor reported on those accounts; their report was unqualified, did not draw attention to any matters of emphasis without qualifying the report and did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

 

The individual financial statements for each Group company are presented in the currency of the primary economic environment in which it operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each Group company are expressed in pounds sterling, which is the functional currency of the Company and the presentation currency for the consolidated financial statements.

 

3.      Accounting policies

 

The same accounting policies, presentations and methods of computation are followed in the condensed set of financial statements as applied in the Group’s latest annual audited financial statements with the exception of IFRS 16 – Leases (see note 4). With the exception of IFRS 16 Leases, no other new or revised standards adopted in the current period have had a material impact on the Group’s financial statements, including IFRS9 financial instruments.

 

The unaudited condensed set of financial statements included in this half-yearly financial report have been prepared in accordance with International Accounting Standard 34 ‘Interim Financial Reporting’, as adopted by the European Union. These condensed interim accounts should be read in conjunction with the annual accounts of the Group for the year ended 31 December 2018. The annual financial statements of Advanced Medical Solutions Group plc are prepared in accordance with International Financial Reporting Standards as adopted by the European Union.

 

4.      Changes in accounting policies – IFRS 16

 

 From 1 January 2019, the Group has adopted IFRS 16 (Leases).

 

The Group is not party to any material leases where it acts as a lessor, but the Group does have a number of material property leases relating to operating sites as well as equipment and vehicle leases.

 

Details of the Group’s accounting policies under IFRS 16 are set out below, followed by a description of the impact of adopting IFRS 16. Significant judgements applied in the adoption of IFRS 16 included determining the lease term for those leases with termination or extension options and determining an incremental borrowing rate where the rate implicit in a lease could not be readily determined.

 

Approach to transition

 

The Group has applied IFRS 16 using the full retrospective approach, with restatement of the comparative information. In respect of those leases the Group previously treated as operating leases, the Group has elected to measure its right of use assets arising from property leases using the approach set out in IFRS 16.C8(b)(i). Under IFRS 16.C8(b)(i) right of use assets are calculated as if the Standard applied at lease commencement but discounted using the borrowing rate at the date of initial application.

 

Financial impact

 

The application of IFRS 16 to leases previously classified as operating leases under IAS 17 resulted in the recognition of right-of-use assets and lease liabilities. Provisions for onerous lease contracts have been derecognised and operating lease incentives previously recognised as liabilities have been derecognised and factored into the measurement of the right-to-use assets and lease liabilities.

 

 

The Group has chosen to use the table below to set out the adjustments recognised at the date of initial application of IFRS16.

 

 

As previously reported

As restated

At 31 December 2018

Impact of IFRS16

At 1 January 2019

£’000

£’000

£’000

Assets

Non-current assets

Property, plant and equipment

18,124

9,726

27,850

Deferred tax asset

177

31

208

Total impact on assets

18,301

9,757

28,058

Liabilities

Current liabilities

Lease liabilities

976

976

Non-current liabilities

Lease liabilities

9,055

9,055

Total impact on liabilities

10,031

10,031

Retained earnings

116,833

(273)

116,560

 

Additional Property, plant and equipment recognised at 31 December 2018 as part of the transition includes £9.0 million of Leasehold property, £0.5 million of Plant and machinery and £0.2 million of Motor vehicles.

 

In terms of the income statement impact, the application of IFRS 16 resulted in a decrease in other operating expenses and an increase in depreciation and interest expense compared to IAS 17. During the six months ended 30 June 2019, in relation to leases under IFRS 16 the Group recognised the following amounts in the consolidated income statement:

 

Six months ended

Six months ended

30 June 2019

30 June 2018

£’000

£’000

Depreciation

(562)

(510)

Operating leases

702

636

Finance cost

(196)

(208)

Net impact on Group profit

(56)

(82)

 

The table below presents a reconciliation from operating lease commitments disclosed at 31 December 2018 under IAS 17 to lease liabilities recognised at 1 January 2019 under IFRS 16.

 

£’000

30 June 2018

£’000

Operating lease commitments disclosed under IAS 17 at 31 December 2018

15,181

Short-term and low value lease commitments straight-line expensed under IFRS 16

(300)

Effect of discounting

(2,775)

Effect of different rent calculations between IAS 17 and IFRS 16

(2,075)

Lease liabilities recognised at 1 January 2019

10,031

 

 

 

 

 

5.      Acquisition of Sealantis

 

  On 31 January 2019 the Group acquired the entire issued share capital of Sealantis Limited, an Israeli based developer of an alginate-based tissue adhesive technology platform.

 

£’000

Identifiable net assets acquired

Technology-based intangible asset

15,012

Property, plant and equipment

21

Other receivables

59

Cash and cash equivalents

999

Trade and other payables

(804)

Deferred tax on Intangible asset

(2,552)

Grant liability

(1,694)

Goodwill

9,765

Total net assets acquired

20,806

 

 

Satisfied by

£’000

Cash consideration

19,407

Contingent consideration

1,399

20,806

 

 

Contingent consideration reflects the fair value of a royalty due to the sellers in each financial year up to 31st December 2027.

 

Net cash flow on acquisition

£’000

Cash consideration

19,407

Cash acquired

(999)

18,408

 

 

None of the goodwill on the acquisition is expected to be deductible for income tax.

 

6.      Earnings per share

 

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

Six months

Six months

Year

ended

ended

ended

30 June 2019

30 June 2018

31 December 2018

Number of shares

‘000

‘000

000

Weighted average number of ordinary shares for the purposes of basic earnings per share

213,876

212,836

213,146

Effect of dilutive potential ordinary shares: share options, deferred share bonus, LTIPs

2,452

3,057

2,911

Weighted average number of ordinary shares for the purposes of diluted earnings per share

216,328

215,893

216,057

 

Basic EPS is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of shares outstanding during the period.

 

Diluted EPS is calculated on the same basis as basic EPS but with the further adjustment to the weighted average shares in issue to reflect the effect of all potentially dilutive share options. The number of potentially dilutive share options is derived from the number of share options and awards granted to employees where the exercise price is less than the average market price of the Company’s ordinary shares during the period.

 

 

Adjusted earnings per share

 

Adjusted EPS is calculated after adding back exceptional items and amortisation of acquired intangible assets and is based on earnings of:

 

(Unaudited)

(Unaudited)

Restated

(Unaudited)

Restated

Six months

Six months

Year

ended

ended

ended

30 June 19

30 June 18

31 December 18

£’000

£’000

£’000

Earnings

Profit for the year being attributable to equity holders of the parent

8,773

10,686

22,487

Exceptional items

920

402

Amortisation of acquired intangible assets

682

40

81

Adjusted profit for the year being attributable to equity holders of the parent

10,375

10,726

22,970

pence

pence

Pence

Adjusted basic EPS

4.85p

5.04p

10.78p

Adjusted diluted EPS

4.80p

4.97p

10.63p

 

 

The denominators used are the same as those detailed above for both basic and diluted earnings per share.

 

The adjusted diluted EPS information is considered to provide a fairer representation of the Group’s trading performance.

 

7.      Segment information

 

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly investments and related revenue, corporate assets, head office expenses, exceptional items, income tax assets and the Group’s external borrowings. These are the measures reported to the Group’s Chief Executive for the purposes of resource allocation and assessment of segment performance. As announced in our annual financial statements for the year ended 31 December 2018, we have renamed our business units from Branded and OEM to Surgical and Woundcare respectively as we believe this better reflects that nature of the business. Comparative segment information has been restated to align with the new business unit structure.

 

Business segments

The principal activities of the business units are as follows:

 

Surgical

Selling, marketing and innovation of the Group’s surgical products either sold directly by our sales teams or by distributors.

 

Woundcare

Selling, marketing and innovation of the Group’s advanced woundcare products supplied under partner brands, bulk materials and the ActivHeal brand predominantly to the UK NHS.

 

Segment information about these Business Units is presented below:

 

Six months ended

30 June 2019

Surgical

Woundcare

Consolidated

(Unaudited)

£’000

£’000

£’000

Revenue

26,491

22,223

48,714

Result

Adjusted segment operating profit

8,929

4,313

13,242

Amortisation of acquired intangibles

(678)

(4)

(682)

Segment operating profit

8,251

4,309

12,560

Unallocated expenses

(255)

Exceptional items

(920)

Profit from operations

11,385

Finance income

200

Finance costs

(366)

Profit before tax

11,219

Tax

(2,446)

Profit for the period

8,773

 

At 30 June 2019

(Unaudited)

Surgical

Woundcare

Consolidated

Other information

£’000

£’000

£’000

Capital additions:

Software intangibles

369

662

Development

275

730

Property, plant and equipment

497

1,231

Depreciation and amortisation

(1,817)

(930)

(2,747)

Balance sheet

Assets

Segment assets

63,656

214,677

Unallocated assets

453

Consolidated total assets

215,130

Liabilities

Segment liabilities

19,267

13,110

32,377

Consolidated total liabilities

32,377

 

 

 

 

Six months ended

30 June 2018 (restated) 11

Surgical

Woundcare

Consolidated

(Unaudited) 

£’000

£’000

£’000

Revenue

27,305

20,316

47,621

Result

Adjusted segment operating profit

9,952

4,031

13,983

Amortisation of acquired intangibles

(38)

(2)

(40)

Segment operating profit

9,914

4,029

13,943

Unallocated expenses

(281)

Profit from operations

13,662

Finance income

157

Finance costs

(267)

Profit before tax

13,552

Tax

(2,866)

Profit for the period

10,686

 

 11 Restated on transition to IFRS 16 (see note 4) and to align to the new business structure.

 

 

 

At 30 June 2018

(Unaudited)

Surgical

Woundcare

Consolidated

Other information

£’000

£’000

£’000

Capital additions:

Software intangibles

20

58

Development

279

498

Property, plant and equipment

1,319

1,752

Depreciation and amortisation

(929)

(1,073)

(2,002)

Balance sheet

Assets

Segment assets

127,059

187,837

Unallocated assets

61

Consolidated total assets

187,898

Liabilities

Segment liabilities

16,399

10,403

26,802

Consolidated total liabilities

26,802

 

 

 

Year ended

31 December 2018 (restated) 11

 

Surgical

Woundcare

Consolidated

 (Unaudited)

£’000

 £’000

£’000

Revenue

57,492

45,106

102,598

 

Result

Adjusted segment operating profit

18,619

10,898

29,517

Amortisation of acquired intangibles

(76)

(5)

(81)

Segment operating profit

18,543

10,893

29,436

Unallocated expenses

(560)

Exceptional items

(402)

Profit from operations

28,474

Finance income

378

Finance costs

(581)

Profit before tax

28,271

Tax

(5,784)

Profit for the year

22,487

11 Restated on transition to IFRS 16 (see note 4) and to align to the new business structure.

At 31 December 2018

(Unaudited)

 

 

 

Surgical

 

 

 

 

 

 

 

 

Woundcare

 

 

 

 

 

 

Consolidated

Other Information

£’000

£’000

£’000

Capital additions:

Software intangibles

170

134

304

Development

815

577

1,392

Property, plant and equipment

1,730

1,332

3,062

Depreciation and amortisation

(2,281)

(1,898)

(4,179)

Balance sheet

Assets

Segment Assets

137,208

67,492

204,700

Unallocated assets

519

Consolidated total assets

205,219

Liabilities

Segment liabilities

19,349

13,145

32,494

Consolidated total liabilities

32,494

 

 

 

Geographical segments

 

The Group operates in the UK, Germany, the Netherlands, the Czech Republic, with a sales office located in Russia and a sales presence in the USA. As a result of the acquisition of Sealantis, the Group now has an office in Israel. In presenting information on the basis of geographical segments, segment revenue is based on the geographical location of customers. Segment assets are based on the geographical location of the assets.

 

The following table provides an analysis of the Group’s sales by geographical market, irrespective of the origin of the goods or services, based upon location of the Group’s customers:

 

(Unaudited)

(Unaudited)

(Unaudited)

Six months ended

Six months ended

Year ended

30 June 2019

30 June 2018

31 December 2018

£’000

£’000

£’000

United Kingdom

8,971

9,190

18,447

Germany

10,437

9,653

23,987

Europe excluding United Kingdom and Germany

12,826

10,957

19,416

United States of America

14,473

16,060

37,317

Rest of World

2,007

1,761

3,431

48,714

47,621

102,598

 

 

The following table provides an analysis of the Group’s total assets by geographical location.

 

(Unaudited)

(Unaudited)

(Unaudited)

Six months ended

Six months ended

Year ended

30 June 2019

30 June 2018

31 December 2018

£’000

£’000

£’000

United Kingdom

138,405

116,641

129,340

Germany

69,024

64,630

66,505

Europe excluding United Kingdom and Germany

4,912

6,143

6,663

United States of America

2,439

484

2,711

Rest of World

350

215,130

187,898

205,219

 

8. Financial Instruments’ fair value disclosures

 

It is the policy of the Group to enter into forward foreign exchange contracts to cover specific foreign currency payments and receipts.

 

The Group held the following financial instruments at fair value at 30 June 2019. The Group has no financial instruments with fair values that are determined by reference to significant unobservable inputs i.e. those that would be classified as level 3 in the fair value hierarchy, nor have there been any transfers of assets or liabilities between levels of the fair value hierarchy. There are no non-recurring fair value measurements.

 

 

The following table details the forward foreign currency contracts outstanding as at the period end:

 

Ave. exchange rate

Foreign currency

Fair value

30-Jun-19

30-Jun-18

31-Dec-18

30-Jun-19

30-Jun-18

31-Dec-18

30-Jun-19

30-Jun-18

31-Dec-18

USD:£1

USD:£1

USD:£1

USD’000

USD’000

USD’000

£’000

£’000

£’000

Cash flow hedges

Sell US dollars

Less than 3 months

1.406

1.284

1.319

9,500

7,500

10,400

(690)

163

(230)

3 to 6 months

1.444

1.282

1.432

7,500

7,300

7,500

(665)

187

(589)

7 to 12 months

1.363

1.374

1.423

16,000

15,900

17,000

(705)

(343)

(1,175)

Over 12 months

1.338

1.443

1.407

5,000

20,000

7,000

(140)

(955)

(397)

38,000

50,700

41,900

(2,200)

(948)

(2,391)

 

 

 

Ave. exchange rate

Foreign currency

Fair value

30-Jun-19

30-Jun-18

31-Dec-18

30-Jun-19

30-Jun-18

31-Dec-18

30-Jun-19

30-Jun-18

31-Dec-18

EUR:£1

EUR:£1

EUR:£1

EUR’000

EUR’000

EUR’000

£’000

£’000

£’000

Cash flow hedges

Sell Euros

Less than 3 months

1.112

1.146

1.114

960

650

600

2

(8)

3 to 6 months

1.108

1.134

1.116

960

1,150

960

2

(7)

(4)

7 to 12 months

1.137

1.115

1.110

1,820

1,560

1,920

46

5

(9)

Over 12 months

1.139

1.109

1.110

900

2,240

320

28

3

(2)

4,640

5,600

3,800

78

(7)

(15)

 

 

9.      Exceptional items

 

During the six months ended 30 June 2019, the Group incurred exceptional items of £0.9 million (2018 H1: £nil) in relation to the acquisition and integration of Sealantis as well as the transaction costs to participate in another potential process which was ultimately unsuccessful.

 

10. Taxation

 

The weighted average tax rate for the Group for the six month period ended 30 June 2019 was 21.8% (first half of 2018: 20.7%, year ended 31 December 2018: 21.1%). The Groups effective tax rate for the full year is expected to be 21.8%, which has been applied to the six months ended 30 June 2019 (first half of 2018: 20.7%, year ended 31 December 2018: 21.1%) after the impact of some disallowable expenditure offset to some extent by the application of patent box and research and development tax relief.

11. Dividends

 

(Unaudited)

(Unaudited)

(Unaudited)

Six months ended

Six months ended

 

Year ended

 

 

 

30 June 2019

£’000

30 June 2018

£’000

31 December 2018

£’000

Amounts recognised as distributions to equity holders in the period:

 

Final dividend for the year ended 31 December 2017 of 0.75p per ordinary share

1,591

1,591

Interim dividend for the year ended 31 December 2018 of 0.42p per ordinary share

901

Final dividend for the year ended 31 December 2018 of 0.90p per ordinary share

1,931

1,931

1,591

2,492

 

12. Contingent liabilities

 

The Directors are not aware of any contingent liabilities faced by the Group as at 30 June 2019 (30 June 2018: £nil, 31 December 2018: £nil).

 

13. Share capital

 

Share capital as at 30 June 2019 amounted to £10,738,000 (30 June 2018: £10,672,000, 31 December 2018: £10,674,000). During the period the Group issued 1,442,313 shares in respect of exercised share options, LTIPS, Deferred Annual Bonus Scheme and the Deferred Share Bonus Scheme.

 

14. Going concern

 

In carrying out their duties in respect of going concern, the Directors have carried out a review of the Group’s financial position and cash flow forecasts for the next 12 months. These have been based on a comprehensive review of revenue, expenditure and cash flows, taking into account specific business risks and the current economic environment.

 

With regards to the Group’s financial position, it had cash and cash equivalents at 30 June 2019 of £63.9 million and a five-year, £80 million, multi-currency, revolving credit facility, obtained in December 2018, with an accordion option under which AMS can request up to an additional £20 million on the same terms.  The credit facility is provided jointly by HSBC and The Royal Bank of Scotland PLC. It is unsecured on the assets of the Group and is currently undrawn. 

 

While the current economic environment is uncertain, AMS operates in markets whose demographics are favourable, underpinned by an increasing need for products to treat chronic and acute wounds. Consequently, market growth is predicted. The Group has a number of long-term contracts with customers across different geographic regions and also with substantial financial resources, ranging from government agencies through to global healthcare companies.

 

After taking the above into consideration, the Directors have reached the conclusion that the Group is well placed to manage its business risks in the current economic environment. Accordingly, they continue to adopt the going concern basis in preparing the condensed consolidated financial statements.

 

15. Principal risks and uncertainties

 

Further detail concerning the principal risks affecting the business activities of the Group is detailed on pages 32 and 33 of the Annual Report and Accounts for the year ended 31 December 2018. There have been no significant changes since the last annual report.

 

16. Seasonality of sales

 

There are no significant factors affecting the seasonality of sales between the first and second half of the year.

 

17. Events after the balance sheet date

 

There has been no material event subsequent to the end of the interim reporting period ended 30 June 2019.

 

18. Copies of the interim results

 

Copies of the interim results can be obtained from the Group’s registered office at Premier Park, 33 Road One, Winsford Industrial Estate, Winsford, Cheshire, CW7 3RT and are available on our website “www.admedsol.com”.

 

 


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